Capital services in U.S. agriculture: Concepts, comparisons, and the treatment of interest rates

Matt A. Andersen, Julian M. Alston, Philip G Pardey

Research output: Contribution to journalReview article

10 Scopus citations

Abstract

This paper begins with a review of the methods and assumptions used to measure capital service flows. Two data series on capital inputs in U.S. agriculture are briefly described and compared. We show that measures of capital services are sensitive to the treatment of interest rates. Notably, the use of fixed versus variable market rates significantly affects measures of the quantity and productivity of agricultural capital in the United States. We conclude that when calculating capital usage in U.S. agriculture, the use of a fixed interest rate generates more plausible estimates than the use of an annual market rate.

Original languageEnglish (US)
Pages (from-to)714-734
Number of pages21
JournalAmerican Journal of Agricultural Economics
Volume93
Issue number3
DOIs
StatePublished - Apr 1 2011

Keywords

  • capital stocks and services
  • interest rates
  • rental rates

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